11/19/1996 Meeting Minutes - Laserfiche WebLink

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Council Minutes of 11/19/96 ,~~ 3) The North Olmsted Commission on Paratransit (NOCOP) met today and voted to ;,,,F: suspend service to Olmsted Township. The cost of this van service is shared by North Olmsted, Olmsted Falls and Olmsted Township. However, the Township is now more than 60 days and $5,000 in arrears. Human Resources Director Copeland has spoken to and written to the Township trustees several times. We have been continuously promised payment. In fact, one of the Township trustees had promised to bring the check to today's meeting; however, she did not attend the meeting. Service will not be immediately canceled; the Township will be given ample time to respond. 4) Regarding the city's bond rating being dropped from Al to BAA1, the Mayor wished to make the following points: • The city could have maintained the Al rating by keeping balances in the bank. However, we made a choice to use tax money on the residents by reducing flooding, fixing streets and improving and staffing the safety forces. The Mayor believes this was the proper way to spend the money and the city is not going to apologize. This was a "lousy" rating. • In general, he has a problem with the rating of cities. The city probably should have objected to this when our rating was an A1. There is a legal limit to how much the city can borrow, and the city is well within that amount. We are not going "belly-up" and we are not going to move or do any of the things that businesses do. We came out of our crisis with more employees and increased services without making cuts and laying off employees. The city is not a risk. Indeed, investors are not at risk investing in a government because State law mandates that the first monies to flow into the city must go to pay off debt. This is another reason that the rating is not valid. To support that theory, it is interesting to note that AMBAC, the insurance company insuring the bond issue, reduced their premium to the city. The insurance cost to the city will be half as much as was paid in 1992, even though our credit rating at that time was Al. In 1992, the city paid a .32% insurance premium; today the rate was .162%. The insurance company believes we are more financially stable now because we have moved our infrastructure from the liability column to the asset column. Today the bonds were easily sold at an interest rate just below 5 1/2%. Even though the city's rating was downgraded, investors were waiting for our municipal paper. So, the rating really did not have an effect. • The Mayor resents the fact that a resident, who is a banker and an announced candidate for election next year, has been secretly contacting Moody's about the city rating and about city finances. He does not know whether this influenced the rating. We made the best possible presentation to Moody's. It is not known whether the resident contacted the insurance companies. The insurance companies did seem to rate the city better than Moody's. • The Mayor also resents the fact that Moody's released the credit rating to the media only a half hour after notifying the Finance Director. The city was not given the opportunity to analyze the results of the rating or notify Council. The official release was supposed to be the following morning; however, Moody's spoke to one resident and at least one person from the media. It is not a professional way of operating. In fact, Moody's did not contact NatCity Investments, our underwriter. Mr. Petty from 2